RESEARCH & RESOURCES

Question and Answer: How Software as a Service Changes the Relationship of Business Users to Business Intelligence

SaaS takes away the chore of installing tools and lets users focus on business impact -- but only if they ask the right questions.

By Linda L. Briggs

June 10, 2009

Few business people have been taught how to analyze their area of the business, so they derive little value from even a top-notch business intelligence solution. That’s according to Ken Rudin of LucidEra, who maintains that, given that lack of training and expertise, even a world-class BI implementation is doomed to fail. “The fact is, though it’s great to be able to get any answer you want, there is no value and no impact to the organization unless you know the right questions to ask,” he says.

In this interview, Rudin, the founder and vice president of market development at LucidEra (an on-demand business intelligence company), talks about how to address that lack of knowledge on the business side, as well as the difference between cloud computing and software-as-a-service, and what SaaS brings to the BI table today.

TDWI: What’s the difference between software-as-a-service (SaaS) and cloud computing? We are seeing these terms used interchangeably more and more.

Ken Rudin: While marketing messages have blurred the distinction for most, here’s the difference. Cloud computing is an umbrella term that means delivering various data center services over the Internet. That includes computing and CPU resources (an example is Amazon’s EC2 offering, which gives subscribers access to a pool of computers), online storage services, and online software development platforms (such as Salesforce.com’s Force.Com platform). Also included in cloud computing are applications delivered over the Web, such as Salesforce.com’s CRM solution, Netsuite’s ERP solution, and LucidEra’s business intelligence applications.

That last group -- applications delivered over the Internet -- is what is generally referred to as SaaS or “on-demand” applications. There’s a broad range of SaaS applications available today, covering just about every application category.

Previously, most of the market focus was on the SaaS segment, the message being that it’s much more efficient to host your applications externally. This message, however, was often received negatively by IT -- it was perceived as a way to sidestep working with IT. The broader message of cloud computing, with its focus on providing a new way of provisioning not just applications but also computing power, storage, and even development platforms, is much more attractive to IT.

Given that, you’re now seeing a messaging shift that is helping IT embrace what’s possible -- the ability to host, manage, customize, and even build apps without software and servers on premise.

A specific case in point is Salesforce.com. They went from being a SaaS CRM application company to a platform company when they introduced Force.com. Now they’re actively marketing the concept of cloud computing to IT audiences.

Why do BI vendors and practitioners seem to focus so much on implementation rather than functions such as data visualization and interpretation, which is presumably what they really want to do?

There are two reasons. First, with traditional BI approaches, you can’t do any data visualization or interpretation unless you have the hardware in place, the software installed, the data warehouse designed and built, an analytic engine configured, ETL processes defined, and metadata set up. That involves a lot of cost, complexity, and consulting, so it’s a major source of revenue for BI vendors and practitioners.

Second, the implementation was seen as the hard part, with the data visualization the easy part (“just create a report to get any answer you want -- it’s easy!”). The interpretation was seen as something best left to the customers, because the customers know their business better than a BI practitioner.

There’s a fundamental flaw with this approach. All of the effort is being put into the wrong place. You’re focusing on implementation, not business impact. You’re making sure the engine is built and runs smoothly (the “hard” part), and just assuming that the customer knows how to drive the resulting car (the “easy” part).

The fact is, though it’s great to be able to get any answer you want, there is no value and no impact to the organization unless you know the right questions to ask. Most people outside of IT haven’t been exposed to how to really analyze their area of the business, so they get no value from a BI solution. Even though the implementation might be world-class, the project will be seen as a failure.

How does SaaS BI solve this issue?

The SaaS model turns this problem on its head. When the vendor takes care of the heavy lifting, the conversation immediately turns to business impact, not implementation. Within days you’re discussing what actions to take based on the results of the analysis.

The SaaS model is also making analytic applications possible. A few years ago, many traditional BI vendors started building analytic templates based on prebuilt schemas. They tried selling directly to line-of-business (LOB) managers instead of selling tools to IT. This was unsuccessful for all of the implementation reasons I mentioned earlier. With the SaaS model focusing BI on business impact, not implementation, the promise of focused analytic applications that contain built-in domain and vertical expertise (without requiring an army of consultants) can become a reality.

What role does IT play in a SaaS implementation? What role does the business side play?

Depending on the company size and organizational structure, IT can play many roles when it comes to SaaS.

IT must establish a clear approach to SaaS applications and cloud computing in general.

IT can assist in establishing application priorities and system requirements (data security, data integration, etc.).

IT can educate LOB managers about what to look for when it comes to procuring and administrating business applications (hint: it’s not all about the magic quadrant!).

For some IT organizations, SaaS is seen as an outsourcing strategy. They see handing off sales analytics to a vendor as a way to address key business priorities, so they can then focus on other business issues, for example, helping to improve internal processes.

How has the role of software buyer changed with SaaS?

It’s interesting. We did a Webinar last year with a number of our SaaS vendors. We called it “The Death of the Enterprise Buying Cycle.” One of the fundamental themes was that the buyer or key decision maker is now often the executive managing the line of business, instead of it traditionally being someone in IT. Users are definitely more involved in the purchasing decision than in the past.

However, another theme that the audience and vendors all kept coming back to was the need for alignment between the lines of business and IT, and a clearly articulated strategy towards SaaS vs. on-premise applications. Alignment has always been a business requirement, but as roles are changing, you need to make sure alignment doesn’t get lost in the shuffle.

A third theme of the Webinar was that the software buyer has an increased opportunity to embrace best-of-breed solutions versus the monolithic suites that have been cobbled together over the years through market consolidation. That’s because cloud computing in general, and SaaS in particular, is ushering in a new wave of open standards and application mash-ups that allow organizations to take advantage of SaaS solutions built from the ground up, and designed to be delivered online and integrated with other online solutions.

What is LucidEra’s approach to SaaS and BI?

At LucidEra, our focus is on making sure that analytics truly has measurable impact on all of our customers. We have a three-pronged approach to delivering SaaS BI:

We’ve built a powerful, complete BI platform that takes care of data movement, integration, aggregation, analysis, and visualization. Customers don’t have to spend energy implementing a platform. It’s already available to them on-demand.

We use our SaaS BI platform to develop and deliver focused analytic applications that contain prebuilt reports, dashboards, and guided analysis for specific business areas, such as Sales Insight and Lead Insight. We sell these applications rather than the underlying platform because it’s our fundamental belief that it’s no longer sufficient for BI vendors to provide customers with a way to get any answer they want -- vendors also need to provide the questions that will lead to the highest impact.

We provide a 48-hour “Healthcheck” service to analyze a customer’s data and help customers interpret the results of the analysis. Even if customers see the critical information that they need, if they’re not sure how to interpret the data and what they should do about it, then BI will have no impact on them. By providing these checks on a quarterly basis, we ensure that our customers take the actions needed to continually improve their performance.